Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Current ratio (CA) or working capital ratio
CA = Current assets/Current liabilities (times)
Current ratio measures the short term solvency or liquidity; it signifies the extent to which the claims of short-term creditors are covered by assets. Current ratio is basically looking at the working capital of the company. Effective management of working capital ensures that organisation is running efficiently. This will ultimately result in increased profitability and positive cash flows. Effective management of working capital involves low investment in non-productive assets such as trade receivables, inventory and current account bank balances. Also maximum use of free credit facilities such as trade payables ensures efficient management of working capital.
Normal current ratio is around 2:1 however this varies within different industries. Low current ratio may indicate insolvency. High ratio may indicate not maximising return on working capital. Valuation of inventories would have an impact on the current ratio, as will year end balances and seasonal fluctuations.
The use of ratios
We will now look at some of the working ratios in detail and illustrate how they can be interpreted.
Determine whether the proposed investment in Gujistan satisfies the investment criteria set by PASE plc. Also discuss the limitations of the criteria in the context of this project
You decide to max-out your annual investment into your Individual Retirement Account and invest $6,000 at the end of each year for the next 17 years. At the end of this investment
list of those and their functions source of fund and how the sources are lend out?
Consider a recent merger between two major corporations. Describe the terms of the merger (cash or stock, premium, changes in management / directors, etc.). Explain the motivation
Question 1: a) What do you meant by equilibrium National Income and to what extent is economic growth beneficial to an economy? b) Explain using both diagrams and mathemat
analysis of bond rate parity among india and usa of last 10-15 years
Prices of Calls and Puts Options the shares of Marks & Spencer a) Explain carefully why the November calls are trading at higher prices than the September calls. b) Draw a diag
DX had the following balances in its trial balance at 30 September 2006: Trial balance extract at 30 September 2006 $000 $000 Revenue
The Citilink Bus Company ("Citilink") was established in 2000 to operate a bus service across a city with 1 million inhabitants. The bus company was created by an indigenous busin
Question I: (50 points) Derive the pricing formula for the expected excess return of a risky stock and the riskfree stock in the traditional consumption-CAPM assuming that the leve
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd